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Have the Last 5 Years Been Worse than the Great Depression?

George Washington's picture




 

What Do Economic Indicators Say?

We’ve repeatedly pointed out that there are many indicators which show that the last 5 years have been worse than the Great Depression of the 1930s, including:

Mark McHugh reports:

 Velocity of money is the  frequency with which a unit of money is spent on new goods and services.   It is a far better indicator of economic activity than GDP, consumer prices, the stock market, or sales of men’s underwear (which Greenspan was fond of ogling).  In a healthy economy, the same dollar is collected as payment and subsequently spent many times over.  In a depression, the velocity of money goes catatonic.  Velocity of money is calculated by simply dividing GDP by a given money supply.  This VoM chart using monetary base  should end any discussion of what ”this” is and whether or not anybody should be using the word “recovery” with a straight face:

 

 Have the Last 5 Years Been Worse than the Great Depression?

 

In just four short years, our “enlightened” policy-makers have slowed money velocity to depths never seen in the Great Depression.

(As we’ve previously explained, the Fed has intentionally squashed money multipliers and money velocity as a way to battle inflation. And see this)

Indeed, the number of Americans relying on government assistance to obtain basic food may be higher now that during the Great Depression.  The only reason we don’t see the “soup lines” like we did in the 30s only because of the massive food stamp program.

And while apologists for government and bank policy point to unemployment as being better than during the 1930s, even that claim is debatable.

What Do Economists Say?

Indeed,  many economists agree that this could be worse than the Great Depression, including:

Bad Policy Has Us Stuck

We are stuck in a depression because the government has done all of the wrong things, and has failed to address the core problems.

For example:

  • The government is doing everything else wrong. See this and this

Quantitative easing won’t help … it will only make things worse.

This isn’t an issue of left versus right … it’s corruption and bad policies which help the super-elite but are causing a depression for the vast majority of the American people.

The government and the banks are doing all of the wrong things. See this and this.

 

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Fri, 09/21/2012 - 12:30 | 2818320 Sandmann
Sandmann's picture

Television and Fluoride keep Americans docile unlike radio in the 1930s.........

Fri, 09/21/2012 - 11:59 | 2818184 boiltherich
boiltherich's picture

George W. you very well could, should, have added another bullet point for DUST BOWL. Between the drought and the deliberate government policy of wrecking the family farm in favor of corporate agriculture I am pretty sure the Joad family will be showing up at some homeless camp in California any day now.

Another glaring similarity is the instability of the global geopolitical situation. And the very fact that for the first time since the "Great Depression" this "depression" is global in nature rather than a US or western recession. We even have a megalomaniacal strongman dictator in a nation that could rise as Germany rose, Tsar Vladimir. Sure he protects his harsh but populist politician image on a media he has total control over, but he is as much Tsar as any Romanov ever was. For those that do not think so go ask a member of Pussy Riot. Criticize Putin, go to prison.

There is also a power vacuum in China as they get ready to change the guard, and the hostile noises coming out of Beijing are as threatening as anything on the world stage in the last 50 years. If China appoints a belligerent leader that exploits nationalism and forms a commercial and military alliance with Putin the result will be disaster.

 

Fri, 09/21/2012 - 11:34 | 2818015 kevinearick
kevinearick's picture

In a world of vaporized collateral, capital return is 85% and labor return is 15%. The middle class is just the last to know. what does physics tell you to expect?

capital has a billion man army of first symtom responders, paid with digital money. let's see how they do.

Fri, 09/21/2012 - 10:53 | 2817879 the not so migh...
the not so mighty maximiza's picture

good article George.

Fri, 09/21/2012 - 10:27 | 2817763 Son of Loki
Son of Loki's picture

Old Depression: Bankers makes Record High Bonuses

 

New Depression: Bankers handed Record High Bonuses

Fri, 09/21/2012 - 10:23 | 2817739 Bob
Bob's picture

Nice piece from Bill Black on the death of rule of law for elite criminals:

http://neweconomicperspectives.org/2012/09/fiat-justitia-breuer-fires-bl...

Fri, 09/21/2012 - 11:23 | 2817729 Shizzmoney
Shizzmoney's picture

Obama was right when he said, "The Private sector is doing fine".......considering that for Wall Street Banks, it's the government (using our taxpayer dollars) propping it up.3

Wall Street has GROWN 21% while he has been office.  Shit, even Shedlon Adelson (who has spent over $20mil in Republican SuperPAC spending) has had his casino business GROW by 821% while Obama has been in office (granted, he also bought off officials in Macau to do so.  Hooray, Communism!).

But don't worry folks: "The jobs are coming"

Fri, 09/21/2012 - 10:01 | 2817605 rsnoble
rsnoble's picture

What? But they keep saying we're in massive recovery? LIE LIE LIE.  It's one of 2 things.........they're either stupid or (and/or) they won't be satisfied until none of us have 1 penny left.  Which is it?

Fri, 09/21/2012 - 11:33 | 2818067 phalfa5
phalfa5's picture

yes

Fri, 09/21/2012 - 10:03 | 2817592 falak pema
falak pema's picture

On the Supreme supreme court and the tiny conspiracy of string pullers.

Well, the new hidden order of Pope, Jehova and neo-Capetian stool pigeon, maleable tool, have cornered the world; and its Jehova that leads this carnival to Noah's Arc and deluge times. Only appropriate. It's a small team of chosen few.

Once on the Arc, nouvelle vague, who will hold the rudder : the Pope, Jehova 'Hook-nose' or neo-Capetian tool from Haaaavad and skull and boner illuminati Yale law school postgrad of fine pure malt oligarchy ale brew? 

My guess is there is one too many on the Arc of Noah Cross or Jehova bossa nova. God only knows one uber-alles-fella avatar.

There will be blood amongst the Gods of Mount Aravat, on Noah's new arc, before the deluge and maybe we the sheeple may find resolution in that. 

If the gods die at Valhalla, can the people survive on treasure island, or must there only be one Robinson on Crusoe island?

What happened to Mrs Robinson did she Crusoe the graduate while they fought over treasure in Israel Hand's hands?

This tale is spookier than what Robert Louis Stevenson had in mind. Black swans and black spots abound. 

Its time to get off the bottle.

In Treasure Island whats does Black Spot Mean

Fri, 09/21/2012 - 09:53 | 2817563 disabledvet
disabledvet's picture

the data doesn't lie...though people sure do. This is a great article...best ever I think (for what it's worth)...being beholden to any time of "mindset" or "predilection" has been a killer. Getting out of this mess clealy entails throwing the very idea that you have a viewpoint that matters in the garbage can. The one data point that stands out to me is the collapse of postal mail volume. In the Great Depression it was a "massive" one percent. In this one it's been 40. There simply is NO recovery from that (look at General Motors and what happened to them.) to make matters worse we are in the greatest conflict the USA has ever seen...and not only do I not know of any plan for withdrawal...obviously there isn't one. I was told just yesterday I needed to "get real." I've been here ticking off everyone going on two years now. I'll let all of you decide whether Disabledvet has a "reality problem."

Fri, 09/21/2012 - 09:56 | 2817537 Spastica Rex
Spastica Rex's picture

But I thought "inequality between the rich and poor" was a good thing - a sign that the producers aren't having their wealth redistributed.

WTF?!

Fri, 09/21/2012 - 09:14 | 2817415 lakecity55
lakecity55's picture

"What? A depression? I'm doin' Great!"

--Dick O'Bama

Fri, 09/21/2012 - 09:01 | 2817371 DavosSherman
DavosSherman's picture

Here’s the intro to the worst literary work ever written 'Essays on the Great Depression' by Ben S. "I'm a Fucking Moron" Bernanke, .  [emphasis mine]

“I guess I [Ben S. Bernanke] am a Great Depression buff, the way some people are Civil War buffs. I don’t know why there aren’t more Depression buffs [oh, trust me, there will be]. The[other] Depression was an incredibly dramatic episode — an era of stock market crashes[2008 and another one coming really soon], bread lines [we have them now, 47 million on "Food Stamps" go to Wal-Mart when the Electronic Benefit Cards get replenished on the last day of the month at midnight by JP Morgan Chase et al who then skim off the poor before Wal-Mart gets the opportunity to do so], bank runs [Greece, Spain and coming to a branch here soon], and wild currency speculation [like we don't have that now, see any currency v. gold], with the storm clouds of war gathering ominously in the background all the while [three wars, 23.8 percent unemployment, 11 percent inflation, the housing market, CRE, auto sales..]. Fascinating, and often tragic, characters abound during this period, from hapless policy makers [makes me start to believe in reincarnation when it comes to Greenspan and Bernanke] trying to make sense of events for which their experience had not prepared them to ordinary people coping heroically with the effects of the economic catastrophe.”

Fri, 09/21/2012 - 08:51 | 2817361 Meesohaawnee
Meesohaawnee's picture

of course it is. From what i understand at least then prices moved downward reflecting spending ability.. now its up. So its a double whammy. like they care.

Fri, 09/21/2012 - 09:26 | 2817317 falak pema
falak pema's picture

On economic pseudo science and its theories that change as often as the snake sheds its skin : 

Here is a new one that belittles the current one favoured by the "minimal government intervention" circles so prevalent in NWO WS steroid-fed FIRE economy hopium of past decade : STUDY: Tax Cuts Don't Lead To Growth - Business Insider

What happened to that middle of the road Laffer Curve logic that cut the cake in two, for no better reason than the fact that it was the reasonable thing to do in a mumbo jumbo pseudo science world of floating rates and fiat pumping rage since B-W revoke of 1971?

PS : it must be noted that the Laffer curve was used historically by the supply side mantra proponents of Reaganomics to reduce top marginal tax rates from 70% to 31%.

Laffer curve - Wikipedia, the free encyclopedia

Fri, 09/21/2012 - 08:21 | 2817301 GeezerGeek
GeezerGeek's picture

While there are many valid points in the article, it overlooks the problem of regulatory strangulation of private enterprises. The barriers to creating new companies are constantly being raised by regulations issued at all levels. Add to that the active program to destroy certain industries and we're lucky to have even an outside chance of an improving economy. Consider, for instance, the recent case of Patriot Coal and Obama's stated intention to put the screws to the coal industry and anyone who, directly or indirectly, uses coal: http://www.thegatewaypundit.com/2012/07/barack-obama-keeps-promise-patri...

The financial side of the economy alone cannot be blamed for the ongoing depression/recession. It's part of the Progressive/Elitist plan.

Fri, 09/21/2012 - 13:11 | 2818491 Panafrican Funk...
Panafrican Funktron Robot's picture

So, Ford Motor company should not have been allowed to squash rail via government intervention then?  I agree!  William Randolph Hurst should not have used his influence over the media and government to outlaw cannabis?  Agreed!  The energy companies should not have been allowed to write their own legislation back in the mid 2000's via Dick Cheney 'n crew?  Agreed!  

 

Main point:  you have left/right blinders on, dude.  We live in a functional oligopoly.  A real conservatie, Gary Johnson, agrees with this assessment.  Liberty or death, right?  Neither candidate is pro-liberty.

Fri, 09/21/2012 - 11:48 | 2818122 Vendetta
Vendetta's picture

yeah...sure

Fri, 09/21/2012 - 10:34 | 2817796 nofluer
nofluer's picture

"The barriers to creating new companies are constantly being raised by regulations issued at all levels. Add to that the active program to destroy certain industries and we're lucky to have even an outside chance of an improving economy."

See: "FDR" and "The New Deal" Same dance.

Fri, 09/21/2012 - 08:27 | 2817300 “Rebellion to t...
“Rebellion to tyranny is obedience to God.”-ThomasJefferson's picture

I believe a different comparison more appropriate: The last 5 years is similar to the Native American's trading away everything they had to the ruthless settlers and US government of the 14,15, 16,17, and 1800's.  Those poor victims didn't know any better so they gave up their horses and land for some marbles, jacks, whiskey, and some playing cards, often at the end of a rifle barrel.  Now it is our turn.  The modern version of this rape is giving up our freedom, brains, and any chance at attaining happiness through wealth, for the opportunity to own Samsung tv's, Igadgets, Facebook accounts, and Cable television through cheap credit.  We are slowly marching the trail of tears to indentured servitude and loss of freedom to an encroaching deceptive government/crony capitalist/bankster/complicit media oligarchy.

Remember what is important:  Family and freedom!  Money comes and goes.  Bad governments get overthrown.  Thieves go to prison.  Murderers get executed.  

We are off the path we want to be on, but we can still get back on track if we stay sharp, question authority, and quit spending time and money on stupid products.

Fri, 09/21/2012 - 08:14 | 2817285 Sudden Debt
Sudden Debt's picture

Get real.

This crisis is a joke compaired to the depression!

We've got thousands of wellfare systems to support us

Nobody has to be hungry

 

Fri, 09/21/2012 - 08:39 | 2817333 d edwards
d edwards's picture

You're right, nobodys hungry-but where is all the $$ to pay for it coming from? thin air.

 

All this QE money pumping is like trying to inflate a bicycle tire with a blown out sidewall. If the global central banks hadn't been money pumping we'd be in a deflationary depression like we've never seen.

Question is, how much longer can they keep this up?

Fri, 09/21/2012 - 08:13 | 2817280 orangegeek
orangegeek's picture

The last five years?  Enjoy the next twenty years.  Deflation for everyone to enjoy.

 

The move from March 2009 has been corrective.

 

http://bullandbearmash.com/chart/standard-poors-500-weekly-september-14-...

 

The next leg down will be the real depression and following the bottom will be pure misery.  Remember 1929?  Bottom was 1932 and recovery occurred by 1936 - we are on a much longer time scale.

Fri, 09/21/2012 - 08:12 | 2817275 pods
pods's picture

That velocity curve is absolutely horrific.

I wish that they would just admit that we are in a depression.  Then at least people would know why they are so depressed and destitute. 

Hell, might even save some kids from being drowned in the bathtub by some suburbanite mom who cannot understand why their life is in shambles but everything is fine.

Everyone I speak to about the economy (way less people now than before) I tell them we are in a depression.  It actually helps to admit the problem, at least we may prepare for when the EBT cards stop working.

For entertainment now I check the cheerleader news daily.  Yahoo finance is my favorite.  Same old stories trotted out day after day.  The word hope is used a lot.  :)

Like this one:

Export surge could help U.S. add 5 million jobs by 2020: study

 

Too funny.  You have to make shit to export it, and since Ben is buying all the MBSs, I think we have little to export but bombs now.

pods

Fri, 09/21/2012 - 08:19 | 2817296 tip e. canoe
tip e. canoe's picture

bombs and bullshit

Fri, 09/21/2012 - 09:52 | 2817560 zendome
zendome's picture

We should be in great shape then, we have boat loads of both!

Fri, 09/21/2012 - 07:39 | 2817215 Benjamin Glutton
Benjamin Glutton's picture
Lehman Brothers ordered to pay compensation

 

A group of Australian councils, charities and churches has won a Federal Court case against defunct investment bank Lehman Brothers in a case which could have global ramifications.

The judgment is considered a test case as it is the first in the world to look at the conduct of an investment bank, on both legal and ethical grounds, in the lead-up to the global financial crisis and how they behaved in the aftermath.

Read the judgment here

The class action involved 72 councils, churches and charities who sued Lehman Brothers for around $250 million, claiming it breached contracts and engaged in misleading and negligent conduct.

Justice Steven Rares has ruled that the parties are entitled to compensation but the amount has yet to be finalised.

They had sought compensation for losses incurred on investments they made on advice from Grange Securities, which was bought by Lehman Brothers Australia in 2007.

The investments had exposure to the housing market collapse in the United States.

Members of the group were advised by Lehman's Australian arm before buying subprime mortgage-related derivatives or collateralised debt obligations (CDOs) branded locally as federation notes.

This was prior to 2007 when America's housing sector began to crash, sparking a meltdown on Wall Street.

Justice Rares found the investors were not properly advised of the risks involved in highly complex financial products.

He said councils were often targeted by Grange Securities because they had ready access to large sums of money for investment, but the the "high risk" nature of the investments made them unsuitable for local councils.

"I have found that Grange engaged in misleading and deceptive conduct in breach of [the act] when it promoted the SCDOs to the councils in terms of suitable investments," he said.

Because Grange is in liquidation, it cannot be ordered to make any compensation payments at this time.

Wingecarribee Shire Council, south-west of Sydney, led the class action seeking to recover $21.4 million in losses.

 

cont.

http://www.abc.net.au/news/2012-09-21/lehmann-brothers-test-case/4273896...

Fri, 09/21/2012 - 11:57 | 2818174 Kayman
Kayman's picture

The Law is designed to provide cover for Financial Criminals.  Grange is bankrupt, any judgement against them is wallpaper, and the criminals have long ago left town with your money.

And the MSM, New York, London and Washington claim to be confused why the average Joe isn't investing in their bullshit !

Fri, 09/21/2012 - 08:04 | 2817251 old naughty
old naughty's picture

Wait...I don't get it. Where would LB (its receiver) have the money to pay?

So te implication is on other IBs, sort of precedent setting, perhaps?

But that would mean they have to save the tbtf banks, or else?

I don't get it. Full circle?

Fri, 09/21/2012 - 13:07 | 2818474 boiltherich
boiltherich's picture

Business Law 101: In general when you buy/take over a business you buy/take over both it's assets and it's liabilities.

This is not really a suit against bankrupt parent company Lehman Brothers but it's Australian subsidiary Grange. If it were a suit against Lehman these towns would have to get into a long line of senior creditors stateside in which they would get back exactly zero cents on the dollar.

I have mixed feelings about such suits, these cities may have simply made a bad investing decision though they claim they were mislead, and I often think that in spite of my empathy for the losses they suffered they had to have known they were benefiting from investments that were simply too good to be true. The investor has a duty to judge the credibility of those they turn their money over to as well as a right to be treated honestly, but they also have to at least apply some common sense when investing.

This brings to mind the many investors of Bernie Madoff, many of whom HAD to have known or strongly suspected that they were deep in the heart of a Ponzi scheme. And if you are too naive to know the rules of investing perhaps you should not be taking risks with your funds. In short, the greed of the localities played almost as large a part in the losses as the deception by Grange. That is not to excuse Grange, but if rulings result in innocent third parties getting screwed so that losers can be compensated then where is the justice? If there were any justice the officers of Lehman and it's global subsidiaries would ALL be facing criminal charges and their ill gotten gains subject to confiscation. Not to mention the rating agencies that participated in the scam with AAA ratings on toxic debt.

Another basic lesson from Business Law 101: Beware unintended consequences. If Grange (which is in bankruptcy) has any assets to pay the judgment handed down in Australian federal court they are most certainly Australian sourced funds. So when the courts award cities in Australia a judgment they are simply taking wealth from one Australian and handing it to another.

Fri, 09/21/2012 - 09:16 | 2817343 Benjamin Glutton
Benjamin Glutton's picture

See Quantitative Easing for Criminals versions 1,2,3......why is the Fed Res. buying 80 Billion a month in repackaged, old and "new" MBS type "instruments". Ben sure as hell isn't doing it for the children.  Likely these repurchases are heading off similar suits and associated discovery.

 

Fri, 09/21/2012 - 07:08 | 2817172 Heroic Couplet
Heroic Couplet's picture

During the time Bush was in office, he and dimwit US Labor Secretary Elaine Chao, Mitch McConnell's wife, missed their jobs creation target every month except for 3. Send US jobs offshore and you have the explanation for all the bullet points.

Fri, 09/21/2012 - 07:57 | 2817234 Gully Foyle
Gully Foyle's picture
Giant Sucking Sound - Ross Perot 1992 Presidential Debate

https://www.youtube.com/watch?v=Rkgx1C_S6ls

https://en.wikipedia.org/wiki/Giant_sucking_sound

The "giant sucking sound" was United States Presidential candidate Ross Perot's colorful phrase for what he believed would be the negative effects of the North American Free Trade Agreement (NAFTA), which he opposed.

History

The phrase, coined during the 1992 U.S. presidential campaign, referred to the sound of U.S. jobs heading south for Mexico should the proposed free-trade agreement go into effect.

Perot ultimately lost the election, and the winner, Bill Clinton, supported NAFTA, which went into effect on January 1, 1994.

Derivations

The phrase has since come into general use to describe any situation involving loss of jobs, or fear of a loss of jobs, particularly by one nation to a rival. For example:

  • A European Union representative spoke of worrying "about the giant sucking sound from Eastern Europe;"[1]
  • An op-ed writer opined that "the Mexicans... are hearing 'the giant sucking sound' in stereo these days—from China in one ear and India in the other.[2]
  • A columnist used the phrase "That Giant Sucking Sound" to introduce a comment about a 34% slump in employment in the U.S. airline industry. [3]
  • Congressman Steve LaTourette (R-OH 14) invoked the catchphrase while criticizing the American Recovery and Reinvestment Act of 2009: "Well, today there's another sucking sound going on in Washington, D.C. And that's the tightening of sphincters on both ends of Pennsylvania Avenue as people are having to explain who put into the stimulus bill this provision of law."[4]

 

Fri, 09/21/2012 - 11:59 | 2818183 Vendetta
Vendetta's picture

another 'benefit' to wall street bankers and the federal reserve that 'free trade' enabled has been they could hide inflation from profligate spending thru 'low cost' crap from slave wage labor markets. 

Fri, 09/21/2012 - 11:48 | 2818126 spanish inquisition
spanish inquisition's picture

Pretty sure Ross never would of picked that phrase if he ever went to Bible camp

Fri, 09/21/2012 - 11:43 | 2818100 cynicalskeptic
cynicalskeptic's picture

http://www.youtube.com/watch?v=4PQrz8F0dBI

others saw this coming - 'free trade' was the western powers committing economic suicide

Fri, 09/21/2012 - 10:16 | 2817551 Bob
Bob's picture

NAFTA was merely proof of concept for the Big One, the coming Trans-Pacific Partnership:

http://www.nationofchange.org/thief-lurks-shadows-1346936485

Fri, 09/21/2012 - 07:07 | 2817170 Ar-Pharazôn
Ar-Pharazôn's picture

quoting Benny as economist is already something bad.

 

but quoting him to validate your theory is even worse

Fri, 09/21/2012 - 07:07 | 2817166 e-recep
e-recep's picture

the big fish are eating the small fish till there's no small fish in the water. there will be a reset, then we'll start over. it's the biorythm we all know. what would you expect? a flat line?

Fri, 09/21/2012 - 07:58 | 2817237 Gully Foyle
Gully Foyle's picture

e-recep

There always small fish. They fuck and BREED more and faster.

Fri, 09/21/2012 - 10:44 | 2817834 nofluer
nofluer's picture

If the big fish own all the water, the little fish have no place to swim or breathe. And these days the big fish are bigger than EVER before. When the big fish have taken over control of ALL the water - there will be a new paradigm and there will be no more little fish - ever.

Fri, 09/21/2012 - 07:01 | 2817162 Vegetius
Vegetius's picture

 "its corruption and bad policies which help the super-elite" Unfortunately this situation does not help the Elite, they are the guys at the top of a burning building. The poor will jump to the ground not far to fall and let’s face it poverty is the ground floor. For those guys at the top they will be left to burn.

Unfortunately, those who are afflicted with hubris revel in it. That's why hubris leads to nemesis. These guys believe they are invincible, don't think they can be stopped. But they always are.

 

Fri, 09/21/2012 - 12:18 | 2818276 Vendetta
Vendetta's picture

they've eaten the small fish alive, when they run out of small fish to eat, they'll turn on themselves ... process is already in motion

Fri, 09/21/2012 - 10:45 | 2817842 nofluer
nofluer's picture

"But THIS time it's DIFFERENT!"

Fri, 09/21/2012 - 06:51 | 2817156 diogeneslaertius
diogeneslaertius's picture

meanwhile localized hyper coldwar put in through currency wars, trade wars, escalationcetera

Fri, 09/21/2012 - 06:50 | 2817155 diogeneslaertius
diogeneslaertius's picture

planned implementation of the deindustrialization of the west in order to bring in a new world order

dont look for an off-the-cliff scenario

 

look for a long, drawn out frog-in-the-pot resulting in every bad 80's movie youve ever seen XD

Fri, 09/21/2012 - 09:47 | 2817529 Bob
Bob's picture

Odd that neither political party is talking about the next leg down for humanity in the evolving neofeudal corporate NWO:

http://www.nationofchange.org/thief-lurks-shadows-1346936485

I guess as long as it's labeled "free trade," it's gotta be good!  For somebody, at least. 

Fri, 09/21/2012 - 12:21 | 2818286 Vendetta
Vendetta's picture

saw Goldsmith's interviews years ago, it can't be repeated enough.  That is why the TV cameras and microphones are only given to the mouthpieces for the financial sector.

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